Correlation Between Samsung Life and Daesung Private

Can any of the company-specific risk be diversified away by investing in both Samsung Life and Daesung Private at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Samsung Life and Daesung Private into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Life and Daesung Private Equity, you can compare the effects of market volatilities on Samsung Life and Daesung Private and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Samsung Life with a short position of Daesung Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and Daesung Private.

Diversification Opportunities for Samsung Life and Daesung Private

-0.34

Correlation Coefficient

Samsung Life  Daesung Private

Very good diversification

The 3 months correlation between Samsung and Daesung is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life and Daesung Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Private Equity and Samsung Life is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Samsung Life are associated (or correlated) with Daesung Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Private Equity has no effect on the direction of Samsung Life i.e., Samsung Life and Daesung Private go up and down completely randomly.

Pair Corralation between Samsung Life and Daesung Private

Assuming the 90 days trading horizon Samsung Life is expected to under-perform the Daesung Private. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Life is 2.01 times less risky than Daesung Private. The stock trades about -0.02 of its potential returns per unit of risk. The Daesung Private Equity is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  148,400  in Daesung Private Equity on October 9, 2024 and sell it today you would earn a total of  50,100  from holding Daesung Private Equity or generate 33.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Samsung Life  vs.  Daesung Private Equity

Samsung Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Daesung Private Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daesung Private Equity are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daesung Private sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Life and Daesung Private

The main advantage of trading using opposite Samsung Life and Daesung Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life position performs unexpectedly, Daesung Private can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Daesung Private will offset losses from the drop in Daesung Private's long position.

The idea behind Samsung Life and Daesung Private Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.